Campbell Cleans House: 7 Of Its Businesses Will Be Spun Off

September 10, 1997|By Bloomberg News Service

CAMDEN, N.J. — Campbell Soup Co. said it will spin off seven slow-growing businesses, including Swanson frozen foods and Vlasic pickles, to focus on soups, cookies and its other most-profitable products.

The world's largest soup company said in July it may sell or spin off the units, which have $1.4 billion in annual sales, or about 18 percent of fiscal 1997 revenue of $7.96 billion. The units will be spun off as a single company to be headed by Campbell Executive Vice President Robert Bernstock.

The spinoff will let Campbell focus on its namesake soups, Prego spaghetti sauce, Pepperidge Farm cookies and food service lines, which had sales growth of 10 percent and earnings growth of 15 percent in 1997. Shedding assets and building up its main businesses are part of a year-old strategy to make Campbell a dominant consumer goods company with reliable earnings.

''Spinning off these businesses allows us to focus on our most-profitable businesses with the highest growth potential,'' said Campbell Soup Chief Executive Dale Morrison.

In the 1990s, the company has sold more than two dozen businesses comprising $800 million in sales, which contributed 1 percent of Campbell's earnings. At the same time, the company purchased 20 businesses with sales of $1.2 billion, which contributed 12 percent to earnings.

Campbell Soup's shares rose $1.313 to $51.688 in trading of 2.2 million, more than triple the three-month daily average of 630,600.

The new company, which hasn't been named yet, will have two divisions: frozen foods, which include Swanson frozen dinners, and grocery, which will include Vlasic pickles, Open Pit barbecue sauce, a fresh-mushroom business and Swift Armour meats, which is Argentina's largest beef exporter.

Until the spinoff becomes effective, the new company will be operated as a separate unit called International Specialty Foods within Campbell Soup, the company said.

Some debt will be transferred along with the new company, although how much is not yet known, said Campbell Soup spokesman Kevin Lowery.

Under the deal, stock in the new company will be distributed to Campbell shareholders. Campbell did not specify how much stock would be distributed but noted the deal was meant to be tax-free to shareholders.

On Monday, Campbell said it would reorganize its remaining businesses into three units: soups and sauces, biscuit and confectionery, and food service. The company previously had reported its results as U.S. grocery products, baked goods and confections, and international grocery.

Campbell, which also makes Godiva chocolates, has been shedding businesses with thin profit margins and buying businesses abroad such as German soup company Erasco. It also is buying back $2.5 billion in stock and cutting 650 jobs.